NRF concerned over plans to expand Internet domain names

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The National Retail Federation announced that it has asked the Commerce Department to delay implementation of a controversial plan to vastly expand Internet domain names, saying retailers and other businesses need more information before moving forward.

“The single comment we are hearing most often from retailers is that they wish they had more time,” NRF SVP and general counsel Mallory Duncan said. “Whether they’re for it or against it, everybody agrees that there has been too much uncertainty around this process. Right now, uncertainty reigns.”

The Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit that administers Internet names for the Commerce Department, plans to launch a program in January that would go beyond traditional three-character “top level” domain names such as “.com” and “.org” to include word-length domains such as “.retail” or “.shop” and also allow business names such as “.NationalRetailFederation” to be used.

The plan has been under consideration since 2009, but “its scope and consequences have largely flown under the radar of most commercial businesses,” Duncan warned in a letter to Lawrence Strickling, head of the Commerce Department’s National Telecommunications and Information Administration. “To adequately plan, businesses need some level of clarity,” Duncan said. “To date, that guidance is lacking.”

Duncan said retailers have a wide range of brand identity issues and legal concerns to address before deciding whether to seek the new domain names. But ICANN has been unclear on information as basic as how many names will be available, citing numbers ranging from 300 to 1,500, he said. In addition, the organization has told some businesses the new domains assigned in 2012 will be all that will be available for the foreseeable future, while telling others new rounds of assignments will be made every few years. Such details are important so businesses will know whether they need to move quickly or will be able to wait, Duncan said.

While some retailers believe the plan will offer new marketing opportunities, others are concerned that they could be forced to spend millions of dollars to protect themselves against “cyber-squatting,” by registering multiple variations of their names to keep competitors, critics or unauthorized users from doing so, the NRF said. Application fees for each of the new domains have been set by ICANN at $185,000, but the NRF said it expects most companies to spend $250,000 per name when legal fees and consultants are included, plus another $50,000 to $100,000 a year to manage the domains thereafter. In some cases, assignment of a domain sought by more than one party would be decided by auction, further driving up costs.